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COST OF LIVING

Soaring energy prices push Italy’s inflation to 37-year high

Italy's inflation rate reached 8.4 percent on Wednesday, its steepest increase in almost four decades, according to official figures.

Italy's soaring inflation rate is driven by high fuel costs, says the country's national statistics agency.
Fuel and energy prices have soared in Italy and Europe since Russia's invasion of Ukraine. Photo by MIGUEL MEDINA / AFP.

The number comes from provisional data released by Italy’s national statistics agency Istat, which said soaring energy prices – up by 44.9 percent in August – were driving the trend.

The last time the country experienced higher rates of inflation was in December 1985, when the figure peaked at 8.8 percent, according to news agency Ansa.

READ ALSO: Russia’s Gazprom cuts gas supply to Italy

Like much of the rest of Europe, Italy is grappling with a deep cost of living crisis brought about by the pandemic and exacerbated by Russia’s war on Ukraine.

On Wednesday, Russia cut Italy’s gas supply by 26 percent as it shut the Nord Stream 1 gas pipeline, ostensibly for maintenance work.

Unlike its European neighbours who are facing similar problems, Italy is also reeling from a political crisis after its third government in four years collapsed in July, triggering snap elections scheduled for September.

Mario Draghi’s outgoing government has approved a series of aid bills in the last few months to assist families struggling with high living costs.

Measures passed to date have included fuel tax discounts, assistance with energy bills, and tax cuts for people earning less than €35,000 a year.

An additional aid package designed to further offset soaring energy costs was expected to be announced by Wednesday.

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COST OF LIVING

Italy’s south hit hard by cost of living crisis as election nears

Mario Conte's Salerno soup kitchen serves 140 hot meals every day but as soaring inflation hits Italy's poverty-stricken south, he is struggling to keep up with demand.

Italy’s south hit hard by cost of living crisis as election nears

And with far-right leader Giorgia Meloni promising to abolish a poverty relief scheme if she wins Sunday’s general elections, he fears things will only get worse.

“There will be a flood of people here,” he warned as he handed out food at the San Francesco kitchen, not far from Salerno’s palm-lined seafront, south of Naples.

The eurozone’s third largest economy is suffering a cost-of-living crisis exacerbated by Russia’s war in Ukraine.

READ ALSO: Soaring energy prices push Italy’s inflation to 37-year high

But as usual it is Italy’s south, long plagued by poverty and unemployment which feels it hardest.

“I pay rent, the electricity bill, and then I’ve got nothing left for food,” said 60-year-old Antonio Mela, a former barman who lives with his brother on a 500-euro state pension.

“Everyone is struggling here,” he told AFP, as he took servings of pasta, pork and potatoes, and fruit.

Energy is a major concern in a country reliant on Russian gas, particularly here, in the Campania region.

According to the Italian Poverty Observatory, the region has the greatest number of people struggling to pay electricity and gas bills.

EXPLAINED: How much are energy bills rising in Italy?

Volunteers prepare food at Mario Conte's San Francesco soup kitchen on September 20, 2022 in Salerno.

Volunteers prepare food at Mario Conte’s San Francesco soup kitchen on September 20, 2022 in Salerno. Photo by Alberto PIZZOLI / AFP.

– Citizens’ income –

Rocco Papa, a spokesman for the Catholic Caritas charity which helps run the kitchen, said there was a “chronic” lack of work in Salerno, where one in 13 people are at risk of extreme poverty.

“The bringing together of many factors, the pandemic, the war, has seriously aggravated the situation,” he said.

While this is a familiar story across Europe, Italy, with its low-skilled and rapidly ageing population, is unique.

It was the only EU country where inflation-adjusted wages fell between 1990 and 2020, according to the Organisation for Economic Cooperation and Development (OECD).

EXPLAINED: What is Italy doing to cut the rising cost of living?

It is also one of just six EU countries without a national minimum wage, having instead, since 2019, the so-called “citizens’ income”.

Nearly 2.5 million people claim this benefit for the jobless, which works out on average at 550 euros a month, costing the state 8.3 billion euros this year.

The majority – 1.7 million people – live on Italy’s islands or in the south, a region with a large shadow economy and where 10 percent of households live in absolute poverty.

But the benefit has been targeted by fraudsters, and some employers say it makes it impossible for them to find staff. They accuse young people of preferring to pocket easy money for sitting at home.

These payments have become one of the electoral campaign’s most divisive issues, to the point that Meloni’s far-right Brothers of Italy party, which led the last opinion polls, has vowed to ditch the scheme outright.

READ ALSO: Italian elections: The main campaign pledges made by Italy’s political parties

Rocco Papa, a spokesman for the Catholic Caritas charity which helps run Mario Conte's San Francesco soup kitchen, is pictured on September 20, 2022 in Salerno. Conte fears the 140 hot meals his Salerno soup kitchen dishes out daily will not be anywhere near enough, should Italy's poverty relief scheme be scrapped after Sunday's elections.
Rocco Papa, a spokesman for the Catholic Caritas charity which helps run Mario Conte’s San Francesco soup kitchen, is pictured on September 20, 2022 in Salerno. Photo by Alberto PIZZOLI / AFP.

– War on poverty –

“The citizens’ income helped hugely,” 70-year-old Conte said. For a while, many guests stopped coming.

Rising prices have brought new faces to his door, however: from divorced dads to struggling carers, whose badly paid, off-the-books work is no longer enough.

The number of people using soup kitchens in Salerno has doubled over the past few months, while a Caritas-run canteen in Castellammare outside Naples has seen a three-fold increase.

Conte feeds an extra 10 families with young children each morning.

This benefit was the brainchild of the populist Five Star Movement, which swept to power four years ago after winning big in the south.

Now trailing the right in the polls, Five Star has vowed to make the income “more efficient”, to bring in a minimum wage and to tackle the gender pay-gap.

The centre-left Democratic Party (PD) also wants to keep a reformed version of the benefit. It has pledged similar other anti-poverty measures as well as with 500,000 new council houses and free school meals.

READ ALSO: Italy plans to scrap VAT on bread and pasta amid cost of living crisis

– Favouring jobs –

But for Meloni, the citizens’ income is not the solution.

Poverty, she told a rally in Palermo, Sicily this week, “is fought by favouring growth and jobs”.

She proposes instead a benefit for those most at risk: disabled people, the over 60s, and struggling families with small children.

Her right-wing coalition, which brings together the anti-immigrant League and right-wing Forza Italia, has also promised tax cuts to boost growth.

The last available polls suggest Five Star and the Democratic Party’s support for the citizens’ income may once again be winning votes in the south – although not everyone here backs it.

“Young people have to work,” said Mela, as he collected his food from the San Francesco kitchen. “It should be for families, not 30-year-olds.

“And they have to check who’s cheating and who’s not.”

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